Wednesday, May 29, 2013
March home price gains biggest since April 2006
Posting the biggest gain in seven years, home prices rose 10.9% in the 12 months ending in March, a closely watched housing index said Tuesday.
From February, prices were up 1.4% for the 20-city composite, as measured by the monthly Standard & Poor's/Case-Shiller index.
Phoenix and San Francisco are the hottest markets with prices up more than 22% year over year. But all 20 cites in the index posted year-over-year growth for the third month in a row.
Twelve of the 20 cities saw prices rise at double-digit annual growth rates.
Las Vegas came in up 20.6% year over year. Miami and Tampa were softer with annual gains of 10.7% and 11.8%.
Even the weakest annual price gains were "substantial," said David Blitzer, chairman of the index committee. New York was up 2.6%, Cleveland, up 4.8%, and Boston, up 6.7%.
Price increases are being driven by strengthening demand, a tight inventory of homes for sale and fewer foreclosed properties, which tend to sell at a discount to others.
Other housing market data reported in recent weeks confirm strong prices. Housing starts and permits and sales of new home and existing homes continue to trend higher.
Given that a large number of homes are still in some stage of foreclosure, the "housing recovery is not complete," Blitzer says.
Still, the appreciation rates are expected to slow.
The low mortgage rates and tight supply are "creating a kind of witch's brew of extreme price spikes," says Stan Humphries, chief economist for online home buying site Zillow.com.
While home values may be up more than 10% year over year in some large metropolitan areas, Humphries says values nationwide are up likely more than half that amount.
The fast appreciation is not an immediate problem in areas like Phoenix and Las Vegas, which experienced huge price declines and are still very affordable, Humphries says.
But they are more worrisome in some places, such as a few markets in California, where affordability is no longer driven by home prices, but instead by low mortgage rates – "which won't last," Humprhies says.
The housing market will continue to improve and outperform the rest of the economy over the next few quarters, many economists say.
Mortgage interest rates are a big help. They've trended higher the past three weeks but the average for a fixed rate 30-year loan was still low by historical standards, at 3.59% for the week ended Thursday, Freddie Mac says.
While the higher rates may discourage some people from refinancing, they're still low enough to keep buying homes affordable, which should further aid home sales and construction, Freddie Mac says.
The report also included first-quarter prices for all of the United States. Year-over-year, the national index was up 10.2% in the first quarter.
Rising prices will bring more inventory onto the market, and price gains will slow to a more sustainable pace over the rest of the year and into next, says Gus Faucher, PNC senior economist.
Rising house prices are supporting overall economic growth. With the recent gains in house prices and stocks, households are wealthier, allowing them to increase spending, Faucher says. That is offsetting some of the drag on consumers from higher taxes and unpaid furloughs for federal workers.
http://www.usatoday.com/story/money/business/2013/05/28/case-shiller-home-prices-march/2363943/
From February, prices were up 1.4% for the 20-city composite, as measured by the monthly Standard & Poor's/Case-Shiller index.
Phoenix and San Francisco are the hottest markets with prices up more than 22% year over year. But all 20 cites in the index posted year-over-year growth for the third month in a row.
Twelve of the 20 cities saw prices rise at double-digit annual growth rates.
Las Vegas came in up 20.6% year over year. Miami and Tampa were softer with annual gains of 10.7% and 11.8%.
Even the weakest annual price gains were "substantial," said David Blitzer, chairman of the index committee. New York was up 2.6%, Cleveland, up 4.8%, and Boston, up 6.7%.
Price increases are being driven by strengthening demand, a tight inventory of homes for sale and fewer foreclosed properties, which tend to sell at a discount to others.
Other housing market data reported in recent weeks confirm strong prices. Housing starts and permits and sales of new home and existing homes continue to trend higher.
Given that a large number of homes are still in some stage of foreclosure, the "housing recovery is not complete," Blitzer says.
Still, the appreciation rates are expected to slow.
The low mortgage rates and tight supply are "creating a kind of witch's brew of extreme price spikes," says Stan Humphries, chief economist for online home buying site Zillow.com.
While home values may be up more than 10% year over year in some large metropolitan areas, Humphries says values nationwide are up likely more than half that amount.
The fast appreciation is not an immediate problem in areas like Phoenix and Las Vegas, which experienced huge price declines and are still very affordable, Humphries says.
But they are more worrisome in some places, such as a few markets in California, where affordability is no longer driven by home prices, but instead by low mortgage rates – "which won't last," Humprhies says.
The housing market will continue to improve and outperform the rest of the economy over the next few quarters, many economists say.
Mortgage interest rates are a big help. They've trended higher the past three weeks but the average for a fixed rate 30-year loan was still low by historical standards, at 3.59% for the week ended Thursday, Freddie Mac says.
While the higher rates may discourage some people from refinancing, they're still low enough to keep buying homes affordable, which should further aid home sales and construction, Freddie Mac says.
The report also included first-quarter prices for all of the United States. Year-over-year, the national index was up 10.2% in the first quarter.
Rising prices will bring more inventory onto the market, and price gains will slow to a more sustainable pace over the rest of the year and into next, says Gus Faucher, PNC senior economist.
Rising house prices are supporting overall economic growth. With the recent gains in house prices and stocks, households are wealthier, allowing them to increase spending, Faucher says. That is offsetting some of the drag on consumers from higher taxes and unpaid furloughs for federal workers.
http://www.usatoday.com/story/money/business/2013/05/28/case-shiller-home-prices-march/2363943/
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